INTRODUCTION

The new economy that propels New Jersey and the nation at
the dawn of the 21st century offers unprecedented opportunities, but
capitalizing on those opportunities requires diligence and strategic
investment. With the economy indisputably driven by knowledge, information, and
technology, New Jersey’s colleges and universities play a pivotal role in
ensuring the state’s economic prosperity and equitable opportunities for all of
its citizens. In addition to developing the workforce and advancing research
and development, higher education instills the civil and social values that
will guide the next generation of leaders.

Widespread efforts to address educational needs from
preschool to graduate school and beyond are already underway in the state. Two
notable examples are the comprehensive efforts to meet the needs of children in
the state’s most disadvantaged school districts and the multifaceted program to
address high-tech workforce and research and development needs. The state has
made strategic, incremental investments in higher education over the past
several years, increasing appropriations for student assistance, institutional
operating aid, capital aid for physical plant and technology infrastructure,
and support for targeted programs. Those investments are reaping dividends in
the form of increased access to affordable higher education opportunities,
improved educational programs, enhanced facilities and technology
infrastructure, increased academic research capacity, and a well-prepared
workforce and citizenry.

Given the key role higher education plays in preparing
future citizens and leaders and sustaining the economy and well-being of the
state, the return on investment in colleges and universities is high. The
Commission on Higher Education encourages the state to make an increased
commitment to higher education that will boldly address the challenges and
opportunities of the future and allow New Jersey to play a leadership role in
sustaining America’s preeminence in the global economy. Recommendations are
contained within this Budget Policy Statement. In addition, it is accompanied
by a more detailed document that provides supporting data and rationale,
demonstrating that higher education institutions are integral to enhancing the
state’s abundant human, geographical, commercial, and industrial assets and to
passing our civilization on to the next generation.

GENERAL OPERATING SUPPORT

The dynamic economy and global marketplace have
significantly increased the demand for higher education and training at New
Jersey’s colleges and universities. As a result, the institutions are expanding
their capacity, enhancing flexibility and responsiveness, and strengthening
parity among all ethnic groups in respect to enrollment, academic performance,
and graduation rates. The operating support from state and local governments
provides the very foundation on which New Jersey’s 31 public institutions exist
and meet increasing demands; the state also provides financial support to the
14 independent institutions with a public mission.

Community Colleges: New Jersey’s ongoing
commitment to increase funding for its 19 community colleges is consistent with
the state’s long-range plan for higher education, which calls for a balanced
funding partnership, with approximately one-third of operating revenues coming
from the state, one-third from the counties, and one-third from students. While
all students benefit from a balanced partnership, the greatest impact is on the
state’s most disadvantaged, low-income students. For them, access to higher
education is particularly dependent on reasonable tuition and fee levels, which
better enable students to complete their degrees expeditiously and to move into
the workforce or to a four-year college.

As a result of annual state funding increases since FY 1999,
average tuition increases at the two-year colleges have been minimal, and
several institutions have frozen tuition. The state’s share of operating costs
increased from 24.8 percent in FY 1998 to 28 percent in FY 2000. The additional
funding provided in the current year and in FY 2002 will continue to increase
the state share. Support from counties varies considerably, with some paying
well above one-third and some paying much less. However, the average percentage
share for counties has decreased. While increased state funding is working to
move the state toward a one-third share, achieving the desired partnership
requires a commitment from all county governments to move toward a share of at
least one-third of operating expenses as well.

Senior Public Institutions: Like the community colleges, the 12 senior
public institutions play a major role in preparing residents for active
citizenship and assuring New Jersey’s economic well-being; their ability to
meet the challenges of the future is tied directly to state support. To help
keep baccalaureate education affordable, the state’s long-range plan for higher
education calls for a two-thirds state share of operating expenses at the
senior public institutions, with the remaining one-third supported by students.
The institutions have been responsive to the long-range plan’s call for
diligence in holding down costs, enhancing instructional productivity, and
collaborating with their peers, as well as in raising external funds to assist
in meeting some nonrecurring costs.

Preliminary figures for FY 2000 indicate the state’s share
of operating expenses was approximately 57 percent. Given increasing demands
for higher education, New Jersey’s commitment to access and affordability, and
the economy’s escalating dependence on knowledge and technology, it is time to
take a bold step and significantly increase the state’s share of operating
costs for the senior public institutions.
The state’s investment in the community colleges has provided
substantial benefits, and a similar investment in the four-year institutions is
warranted. Specifically, the Commission recommends a 4 percent increase in
operating aid and full support of salary program increases resulting from
negotiated cost-of-living increases and contractual increments. Together, the
increases for operating expenses and the salary program will amount to approximately
10 percent of the state’s FY 2001 appropriation.

This additional funding will move the state closer to the
desired two-thirds share of state support, reduce the need for tuition
increases, and have a significant impact on the continued affordability,
adequate capacity, and overall quality of the public four-year institutions.
Restraint in tuition increases in this sector also will enhance access to
higher education opportunities for citizens, reduce time to degree completion,
and expedite entrance into the workforce.

Independent Institutions: In order to help
maintain a strong sector of independent institutions that offers both access
and choice, New Jersey’s Independent College and University Assistance Act
(ICUAA) provides state funding to the 14 independent institutions with a public
mission. This support recognizes that 75 percent of the students at the
independent colleges and universities are New Jersey residents. Like the public
two- and four-year colleges, the independent institutions help fuel the economy
and advance quality of life by preparing responsible citizens, leaders, and a
labor force to meet the challenges of the future. The Commission recommends an
increase of $3 million in FY 2002 to move toward full funding of the ICUAA, as called
for in the long-range plan for higher education.

EQUITABLE ACCESS AND STUDENT SUPPORT

New Jersey is one of the most diverse states in the nation,
and it has a longstanding commitment to state student assistance programs that keep
higher education affordable and open the doors of knowledge and opportunity to
all who can benefit. The state is ranked second in the nation in the percentage
of full-time undergraduates receiving need-based grant aid and in need-based
dollars per student; it is sixth in financial aid of any kind as a percentage
of total state higher education funding.

Tuition Aid Grant program (TAG): The state’s
primary need-based aid is provided through TAG, which significantly reduces
tuition costs for nearly one-third of all undergraduates attending public and
independent colleges and universities in New Jersey. In FY 2002, increasing TAG
to maximum current year tuition levels for full-time students will help ensure
access and affordability and continue the state’s longstanding commitment to
need-based aid. In recent years, support has escalated for the idea of
extending TAG to economically disadvantaged part-time students as well, without
limiting funds for those who attend full-time. After discussing a recent study,
the Higher Education Student Assistance Authority adopted a recommendation to
establish a TAG program for part-time students. The Commission supports the
Authority’s recommended program and an appropriation of $9.8 to $11.0 million
to support the part-time TAG program.

Educational Opportunity Fund (EOF): New Jersey’s Educational Opportunity Fund
enhances access to higher education for roughly 12,400 disadvantaged students
each year with a unique combination of supplemental aid and student support
services. Given the state’s changing demographic profile and the challenges
posed by our global, high-tech economy, EOF’s continued success in helping
students overcome financial and academic obstacles is critical.

The Commission recommends an increase of $1.5 million in
Article IV funding for campus-based EOF student services. This is clearly a
priority for FY 2002, recognizing that greater support for counseling,
tutoring, academic, career exploration, prefreshman, and other EOF support
services has a major impact on long-term student success. These programs have
great potential to narrow the gap between transfer and graduation rates for
low-income minority students and those who do not face educational or economic
disadvantages. At the same time, while Article III academic year grants to
students increased in FY 2001 (by $100 per student at public institutions and
$200 for those at independent institutions), those students and families who
face extraordinary costs relative to their incomes would benefit greatly from
another increase in the Article III grants.

College Bound:New Jersey’s College Bound Grant Program is highly effective in helping
sixth- through twelfth-grade students in 15 Abbott school districts complete
high school and pursue college-level studies in math, science, and
technology. The Commission recommends a
$2.1 million increase to improve services and expand programs to additional
Abbott districts and students. This increased investment will enable College
Bound to add up to six campus-based programs and expand the number of students
served from 2,100 to approximately 3,300.
It also will enable the programs to purchase the computer hardware and
software needed to support high-quality precollege exposure and enrichment in
math, science, and technology. In
addition to these immediate benefits, increased support for College Bound also
will enable the campus-based programs to leverage funding from other sources,
such as the $10 million federal GEAR UP grant the Commission won last year.

CAPITAL AND RELATED SUPPORT

Establishing and preserving a safe and adequate physical
plant are critical to educating the populace, recruiting and retaining
students, fostering research and development, and enhancing the overall quality
of higher education. To meet the challenge of maintaining modern facilities and
providing students with access to world-class instruction and technology, New
Jersey currently supports six bond programs targeted to capital needs in higher
education: Chapter 12 for community colleges, the Higher Education Facilities
Trust Fund, the Equipment Leasing Fund, the Technology Infrastructure Fund, the
Capital Improvement Fund to address deferred maintenance and renewal at the
four-year institutions, and the newly created Dormitory Safety Trust Fund.

In addition, the state’s support for ongoing capital renewal
at the senior public colleges and universities protects state assets and is
critical to providing safe, secure, and appropriate facilities. Each of the
senior public institutions that is eligible for such aid submits detailed data
regarding renewal needs, and the Commission urges that those needs be given due
consideration. As a general principle, the Commission recommends that the state
appropriate annually no less than 1 percent of the replacement value of the
physical plants to assist these institutions and ensure preparedness to meet
the challenges of the 21st century.

INVESTMENT IN EXCELLENCE

High-Tech Workforce Excellence Grants:
Recognizing that knowledge is the principal engine of economic growth and
societal well-being, many states have recently made significantly increased
investments for excellence in higher education. Last year, New Jersey invested
$15 million in the High-Tech Workforce Excellence Grant program. As a result,
nine outstanding high-tech education projects received funds to create a
pipeline of graduates to meet future workforce needs. At the same time, the top-quality technology-related programs
will help to create, attract, and retain high-tech companies and jobs in New
Jersey. The nine programs, ranging from sophisticated engineering and
biomedical programs to improved training for math and science teachers,
demonstrate the synergy that exists between higher education and New Jersey’s
high-tech workforce. An appropriation for a second round of grants in FY 2002
will further develop outstanding high-tech academic programs that are essential
to meet the demands of New Jersey’s highly competitive marketplace.

Teacher Preparation and Development: As states across
the nation and the federal government place teacher quality at the top of the
agenda, colleges and universities face an enormous challenge and
responsibility. They must educate more teachers and ensure that teachers are
prepared to effectively undertake their role as educators in a new economy that
depends more than ever on knowledge and its application.

There is a significant demand for new teachers in
New Jersey. There will be moderate enrollment increases, along with large-scale
retirements and continuing resignations.
In addition, New Jersey faces the need for large numbers of new teachers
for three- and four-year-olds to meet the state’s Supreme Court mandate growing
out of the Abbott v. Burke decision. In fact, the effort to improve the
quality of education in the state’s most disadvantaged school districts will
require more and better-prepared teachers in all grades in the Abbott
districts. Like other states, New
Jersey also faces pressures to decrease class sizes in the early grades.

A number of initiatives are already underway in New Jersey
to improve teacher quality. The state must, nevertheless, make additional
efforts to expand the capacity of colleges and universities to prepare
high-quality teachers; expand the recruitment and retention of minority
teachers; address the critical shortages in special education, preschool
education, mathematics, and science; recruit and retain effective teachers in
urban and rural areas; and raise the overall desirability of teaching as a
profession. The Commission has been working with the Department of Education
and college and university representatives to develop the following series of
related initiatives to comprehensively address these teacher quality and
shortage issues.

Much of the responsibility for improving the quality of the
educators in our nation’s schools depends heavily upon the strength and
effectiveness of teacher preparation and development programs. Therefore, $10
million is recommended for a special teacher preparation and development
initiative that assists the colleges and universities with teacher preparation
programs to construct a comprehensive approach to change, with a focus on four
primary goals:

1)Moving the education of teachers to the top of institutional
agendas and articulating the centrality of teacher preparation to the roles and
missions of institutions, with a focus on the role of arts and sciences
faculty;

3)Improving teacher preparation and professional development in
a manner that links knowledge and performance expectations for teachers with
the content standards for P-12 students; and

4)Expanding collaborative efforts with P-12 schools in areas such
as curriculum development, mentoring, induction, and professional development.

This initiative will strike at the very core of teacher
quality by assisting the institutions in their move toward comprehensive
program improvement and increased capacity to prepare highly effective
educators. The Commission is developing specific criteria for distribution and
use of the funds in consultation with the Department of Education and the
institutions, and the Department will assist in reviewing institutional plans
for use of the funds.

The Department is developing, in consultation with the
Commission, two related initiatives. The first is a targeted effort to recruit
highly qualified teacher candidates of color, as well as highly skilled
candidates for science, mathematics, preschool, and special education to teach
in disadvantaged school districts. The second is the establishment of
Professional Development Academies at the state’s six primary teacher education
colleges and universities to provide programs to enhance the quality and
retention of current teachers.

These targeted efforts to improve the capacity and quality
of teacher preparation and professional development programs have the potential
to significantly advance school reform efforts. They will positively impact
schools statewide and play a particularly important role in the effort to
provide parity in the state’s Abbott school districts. High-quality educators
are among the state’s most precious resources, and the investment in these
initiatives will reap significant returns.

RESEARCH AND ECONOMIC DEVELOPMENT

Research and development is critical to the nation’s
economic competitiveness in the 21st century, and academic research
plays a major role. It is instrumental in creating new businesses and jobs,
spawning new industries, advancing medicine and health care, and improving
productivity in the state. In fact, relatively small state investments in
university research infrastructure have produced highly leveraged returns in
external support dollars. Between 1987 and 1997, the state’s universities
collectively increased their research expenditures by well over one-fourth,
spending approximately $369 million in 1997. However, New Jersey institutions
continue to be below the national average in research funding from the federal
government, and they lag in industry support as well.

In FY 2001 the state appropriated $10 million to increase
university research capacity and provide matching state dollars for federal
grants. The Commission recommends continuing this strategic investment to
increase federal and corporate dollars flowing to New Jersey’s research
universities.

CONCLUSION

Clearly, the 21st century holds both daunting challenges
and exceptional promise for the state and the nation. Increasing state spending
in FY 2002 for operating aid, student assistance and support programs, and
campus infrastructure and high-tech equipment will directly benefit New
Jersey’s economy and its quality of life.
At the same time, new commitments to improve teacher preparation and
professional development and expand our high-tech workforce will create a
pipeline of individuals with the skills and knowledge to lead our state into an
increasingly complex and competitive future.
Continued support is also necessary for the other ongoing
state-supported programs that help keep higher education accessible,
affordable, and of high quality for all New Jerseyans. Together they will ensure the state’s
economic prosperity and equitable opportunities for all of its citizens.